Wednesday, 11 March 2009

Favouring a flat tax

Richard A. Epstein writes on Favo[u]ring A Flat Tax at

Epstein writes
But by the same token, sensible libertarians are not anarchists, and thus, in funding public projects, have to choose that form of taxation that is least intrusive on individual liberty. Their uniform answer: the flat tax.

On the private side, a flat tax reduces the distortions that otherwise arise when two individuals receive different after-tax returns on their labor or investment. The flat tax also eliminates private incentives to concoct wasteful schemes to shift their income onto the ledger of their poorer relatives

On the public side, the flat tax limits political discretion by making it harder for the government to single out "the rich" for special treatment. It also crimps government spending by denying any group the luxury of supporting government expenditures entirely at someone else's expense.
This last point may help explain why we don't have a flax tax, it helps stop governments taxing one group to enrich another, in the hope of gaining votes from the transfer.

1 comment:

LetUsHavePeace said...

If the goal is to increase the government's take, then tax rates should follow the common sense of all enterprise - offer your best customers a better deal. A "regressive" (sic) rate structure would be better than any other, provided it also eliminated the arbitrage among entities (i.e. all taxpayers had the same rate schedule.) That such a rate structure is not even considered is an indication of how much political-economic behavior is based on envy. Neither conservatives nor liberals would be happy with a system that "rewarded the rich", even if it meant the government had more money to play with and capital could more easily be converted to money that could be invested in new and different ways to make a buck and those bucks could be taxed again. Oh, the horror.